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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The sum of consumer surplus and producer surplus






2. The total quantity - or total output of a good produced at each quantity of labor employed






3. Product demand - productivity - prices of other resources - and complementary resources






4. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






5. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






6. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






7. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






8. 0 < Ei < 1






9. Two goods are consumer substitutes if they provide essentially the same utility to consumers






10. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






11. Entry (or exit) of firms does not shift the cost curves of firms in the industry






12. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






13. TR = P * Qd






14. MUx / Px = MUy/Py or MUx/MUy = Px/Py






15. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






16. Occurs when LRAC is constant over a variety of plant sizes






17. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






18. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






19. The practice of selling essentially the same good to different groups of consumers at different prices






20. The imbalance between limited productive resources and unlimited human wants






21. AFC = TFC/Q






22. Models where firms agree to mutually improve their situation






23. Total product divided by labor employed. APL = TPL/L






24. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






25. A firm that has market power in the factor market (a wage-setter)






26. Es = (%dQs) / (%dPrice)






27. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






28. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






29. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






30. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






31. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






32. When firms focus their resources on production of goods for which they have comparative advantage






33. Ei > 1






34. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






35. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






36. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






37. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






38. The output where ATC is minimized and economic profit is zero






39. Ed = (%dQd)/(%dP). Ignore negative sign






40. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






41. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






42. The lost net benefit to society caused by a movement away from the competitive market equilibrium






43. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






44. A good for which higher income increases demand






45. Ed = 8 - infinite change in demand to price change






46. Ed < 1






47. Ed = 1






48. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






49. The difference between total revenue and total explicit and implicit costs






50. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit